ARTICLES 1536 TO 15471544 double salesif the same thing should have been sold to different vendees, the ownership shall be transferred to the person who may have first taken the possession in good faith (movable)

if immovable, to the person, acquiring it, who in good faith first recorded it in RP

if no inscription, to the person who in good faith was first in possession;

if none, who has oldest title in good faith

Conditions and warranties

1545 (conditions not performed) refuse to proceed or waive performance; if theres promise treat it as breach of warranty

ownership hasnt passed buyer treat the fulfillment of obli by seller to deliver as condition in order for the buyer to perform his promise to pay/accept

express warranty affirmation of fact to the effect that the buyer is induced to purchase

implied warranty 1. Seller has right to sell

2. maintains the buyer the legal and peaceful possession

3. free from any hidden faults or defects

W of E: stipulation as to exemption from vendors obli to answer for eviction VOID

: vendee renounced, eviction takes place Vendor to pay the value of thing sold at the time of eviction

: vendee waives, with knowledge of risk vendor NOT liableLiability of seller:

1. to return value at time of eviction

2. income/fruits if vendee was ordered to deliver it to the prevailing party

3. costs of suit

4. expenses of the contract

5. damages and interests sale was in bad faith

PARTIAL EVICTION: vendee may demand rescission but with obli to return thing without encumbrances OR enforce vendors liability for eviction

There has to be a judicial order/final judgment rendered before enforcement of W of E.

Warranty against non-apparent burden or serviture vendee may ask for rescission unless he preferred appropriate indemnity. If such non-apparent burden is registered (unless theres express warranty) not applicable

Within 1 yr from exec of deed may ask for rescission + damages

After lapse of 1 yr only action for damages within equal period counted from date on which he discovered burden

W of HD:

goods shall be reasonably fit

goods shall be of merchantable quality (bought by description)

contract of sale by sample seller is dealer of goods W from any defects rendering them unmerchantable

vendor is responsible for any HD in thing sold EVEN THOUGH HEs NOT AWARE not appicable if theres stipulation to the contrary and vendor is not awareR: Vendee may withdraw the contract + damages or demand reduction of price + damages

LOST as result of HD vendor aware he shall bear the loss + return price+expenses+damages

vendor NOT aware return price+ interest+ reimburse contract expenses

HD at time of sale LOST by fortuitous event / vendees fault Vendee may demand price he paid less value which thing had when it was lost

6 MONTHS

OBLI of VENDEE

Buyer not bound to accept delivery in installments

Buyer not deemed to have accepted such if no oppportunity of examination

Buyer deemed to have accepted goods when he 1. Intimates to seller his acceptance; 2. does any act inconsistent with ownership of seller; 3. Retains the goods without telling to seller he rejected such

Acceptance of goods shall not discharge seller from liability in damages/warranty

Buyer not bound to return the goods delivered to him, which he refused (having right to do so)

no right to refuse title passes to him from moment of disposal

Buyer owers interest bet. Delivery and payment if 1. Stipulated; 2. Theres fruits and income; 3. In default

Buyer may suspend payment of price until vendor ceases the cause of disturbance

-mere act of trespass not authorize

IMMOVABLE: Buyer may still pay the vendor after expiration of period in agreement if theres no judicial demand for rescission by the vendor

MOVABLE: Buyer must pay it outright unless otherwise provided, OTHERWISE, vendor may rescind

ACTIONS FOR BREACH OF CONTRACT

both may rescind the contract

breach of warranty by seller:

1. accept and set up against seller by way of recoupment in diminution or extinction of price

2. accept and maintain action for damages

3. refuse and maintain action for damages

4. rescind and refuse to receive or return and recover price

if buyer knew when he accepted the breach without protest or notification to seller or fails to return in good condition, CANNOT rescind EXTINGUISHMENT OF SALE

PAymentLOssREmissionMErgerCOmpensationNOvationConventional redemption when vendor reserves right to repurchase thing sold upon compliance to pay contract expenses + necessary and useful expenses

PREIOD:

4 yrs no agreement

10 yrs- limit if theres one

30 days civil action on basis that such contract was a true sale with right to repurchase

Equitable mortgage

Priceisinadequate

Remainsinpossession

Extension

Purchaserretainspart

Bindstopaytaxes

Othercase- fairly inferred to secure payment

Incase of doubt

REAL prop there must be a judicial order before registration in RDVendor may bring his action against every possessor whose right is derived from vendeeCreditor of vendor cannot use right of redemption against buyer (unless exhausted)

Legal redemption right to be subrogated upon same terms and conditions, stipulated in the contract, in the place of one who acquires the thing by purchase or dation in payment, or by any other transaction whereby ownership is transmitted by onerous title

coowner

rural: not exceed one hectare, adjoining land, unless grantee does not own any rural land; if two or more = smaller, if equal = first requested

urban land: small, situated that major portion cant be used for practical purpose within reasonable time, bought merely for speculation; if 2 or more = intended use is best justifiedpre-emption / LR 30 days from notice in writing by prospective VENDOR; deed of sale cant be registered without affidavite stating that he has given notice to all possible redemptioners

co-owners prevail over adjoiners CARBONELL VS CAFrom Atty Busmentes discussion: What should be registered is the right to the property not deed of sale per se.CONTRACTS; PURCHASE AND SALE OF REALTY; REGISTRATION; EFFECT OF GOOD FAITH ON DOUBLE SALES. The buyer of realty must act in good faith in registering his deed of sale to merit the protection of the second paragraph of Article 1544 of the New Civil Code. Unlike the first and third paragraphs of said Article which accords preference to the one who first takes possession in good faith of personal or real property, the second paragraph directs that ownership of immovable property should be recognized in favor of one "who in good faith recorded" his right. Under the first and third paragraphs, good faith must characterize prior possession. Under the second paragraph, good faith must characterize the act of anterior registration. If there is no inscription, what is decisive is prior possession in good faith. If there is inscription, prior registration in good faith is a pre-condition to support title.DOUBLE SALE; FIRST BUYER IN GOOD FAITH WITH SUPERIOR RIGHT OVER PROPERTY. Where the first buyer was not aware - and could not have been aware - of any sale to another person as there was no such sale, the buyer's prior purchase of the land was made in good faith. Her good faith subsisted and continued to exist when she recorded her adverse claim four days prior to the registration of the second buyer's deed of sale. The first buyer's good faith did not cease after the seller told her of his second sale of the same lot to the second buyer. By reason thereof, she has superior right to the land in question.A private document is a valid contract of sale between the parties, since sale is a consensual contract and is perfected by mere consent. Quick Case Recap: Double sales. Sale #1 Poncio to Carbonnel private memorandum of sale. Sale #2: 4 days later, Poncio to Infante - private memorandum bound himself to sell, thereafter executed a formal registrable deed of sale. When Carbonell asked for formal signature of Poncio on Deed of Sale, Poncio declined as he already formalized contract of sale with Infante. Carbonell did next best thing to protect her legal rights and registered with RD her adverse claim as first buyer entitled to property, before Infante registered the sale. Plus 2nd buyer here showed to be in bad faith.DAGUPAN TRADING COMPANY VS MACAMG.R. No. L-18497. May 31, 1965

ONE SALE BEFORE REGISTRATION OF LAND AND THE OTHER AN EXECUTION SALE AFTER REGISTRATION OF LAND; LAW GOVERNING. Where one of two conflicting sales of a piece of land was executed before the land was registered, while the other was an execution sale in favor of the judgment creditor of the owner made after the same property had been registered, what should determine the issue are the provisions of the last paragraph of Section 35, Rule 39 of the Rules of Court to the effect that, upon the execution and delivery of the final certificate of sale in favor of the purchaser of land sold in an execution sale, such purchaser "shall be substituted to and acquire all the rights, title, interest and claim of the judgment debtor to the property as of the time of the levy".

UNREGISTERED SALE CANNOT BE DEFEATED BY SUBSEQUENT EXECUTION SALE AND REGISTRATION OF LATTER. Where for a considerable time prior to the levy on execution the interest of the owner of the land levied upon had already been conveyed to another who took possession thereof and introduced improvements therein, the aforesaid levy is void. The prior sale, albeit unregistered, cannot be deemed automatically cancelled upon the subsequent issuance of the Torrens title over the land.

Quick Case Recap: Sale #1 - Sammy Maron to appellee-defendant Macam pending application for registration, Maron acquired OCT after free from lien. Sale #2 Interest of Maron on property was levied by final judgment, sold at public auction and cert of sale awarded to the judgment debtor, Manila Trading and Supply Co. who later sold it to appellant-petitioner Dagupan Trading Co.DAVID VS BANDIN GR L-48322, April 8, 1987

SALES; UNREGISTERED LAND; DEFENSE OF BUYER IN GOOD FAITH CANNOT BE AVAILED IN PURCHASES OF UNREGISTERED LAND; CASE AT BAR. As the record shows, petitioners bought the property when it was still unregistered land. The defense of having purchased the property in good faith may be availed of only where registered land is involved and the buyer had relied in good faith on the clear title of the registered owner. One who purchases an unregistered land does so at his peril. His claim of having bought the land in good faith, i.e. without notice that some other person has a right to, or interest in, the property, would not protect him if it turns out that the seller does not actually own the property. This is what happened in the case at bar.

CONVERSELY, PROTECTION ACCORDED TO PURCHASES IN GOOD FAITH WHERE SUBJECT OF SALE IS REGISTERED LAND; NOT THE SITUATION AT BAR. The appellate court held that Jose Ramirez and his father Sotero Ramirez were not purchasers in good faith, not having made diligent investigation of the true ownership of the properties they bought, but relied merely on the tax declaration shown to them by the seller, Rufino Miranda. We have no reason to disturb the foregoing findings of the respondent appellate court. Besides, as mentioned earlier, the issue of good faith or bad faith of the buyer is relevant only where the subject of the sale is registered land and the purchaser is buying the same from the registered owner, whose title to the land is clean. In such case, the purchaser who relies on the clean title of the registered owner is protected if he is a purchaser in good faith for value. However, this is not the situation before us in the instant case. What petitioners bought were unregistered lands.

REGISTERED LAND; PURCHASER IN GOOD FAITH FOR VALUE PROTECTED BY THE LAW; ABSENT ANY SHOWING OF ACTUAL NOTICE OF DEFECT IN TITLE, SALE AND TITLE CANNOT BE CANCELLED; CASE AT BAR. The case of Magno de la Cruz stands on different footing from the other petitions. The property purchased by him from Victoria Martin and Maximina Martin were registered lands, covered by Torrens title. Being a purchaser in good faith for value, Magno de la Cruz is protected by the law. In the absence of a showing that he had actual notice of the defect in the title of the vendors or that he is a buyer in bad faith, the deed of sale in his favor and the corresponding certificate of title issued in his name cannot be nullified and cancelled. Hence, it was error for the respondent court to invalidate the sale made by Victoria and Maximina Martin in favor of Magno de la Cruz to the extent that it prejudiced the two-third (2/3) pro-indiviso share of respondents in the property and to order petitioner to reconvey said share to respondents. The petition of Magno de la Cruz is meritorious, and the decision appealed from should be modified accordingly.OLIVARES VS GONZALESG.R. No. L-34500. March 18, 1988

REMEDIAL LAW; CIVIL PROCEDURE; BAR BY PRIOR JUDGMENT; NOT APPLIED IN THE INTEREST OF SUBSTANTIAL JUSTICE. It would be more in keeping with substantial justice if the controversy between the parties be resolved on the merits rather than on a procedural technicality in the light of the express mandate of the Rules that they be "liberally construed in order to promote their object and to assist the parties in obtaining just, speedy and inexpensive determination of every action and proceeding." In this case, the dismissal of the Quieting of Title Case for failure to prosecute does not bar the institution of a subsequent suit by the same plaintiffs against the same defendants on the same cause of action.Quick Case Recap:: Sale #1 1955 Tuvillas to Tumabini, sale not recorded in Registry of Property. Sale #2 1959 Tuvillas to Olivareses, saled recorded in Registry of Property and Olivareses has been in possession since 1959. 1967 Tumabini filed Consolidation Case where Olivareses where not included as parties and acquired favourable judgment. A Writ of Execution, property sold at public auction, and Writ of Possession issued in his favor. 1968 Olivareses filed Quieting of Title, which RTC dismissed in 1970.

CARAM VS LAURETAG.R. No. L-28740. February 24, 1981

In the instant case, Irespe and Aportadera had knowledge of circumstances which ought to have put them on inquiry. The rule of caveat emptor requires the purchaser to be aware of the supposed title of the vendor and one who buys without checking the vendor's title takes all the risks and losses consequent to such failure.

The principle that a person dealing with the owner of the registered land is not bound to go behind the certificate and inquire into transactions the existence of which is not there intimated should not apply in this case. It was of common knowledge that at the time the soldiers of Laureta took the documents from Mata, the civil government of Tagum was not yet established and that there were no officials to ratify contracts of sale and make them registrable. Obviously, Aportadera and Irespe knew that even if Mata previously had sold the disputed property such sale could not have been registered.

There is no doubt then that Irespe and Aportadera, acting as agents of Caram, purchased the property of Mata in bad faith. Applying the principle of agency, Caram, as principal, should also be deemed to have acted in bad faith.CRUZ VS CABANAG.R. No. 56232. June 22, 1984

KNOWLEDGE OF PRIOR SALE TAINTS SECOND PURCHASER'S PRIOR REGISTRATION WITH BAD FAITH; CASE AT BAR. When petitioner Cruz succeeded in registering the later sale in his favor, he knew and was informed of the prior sale in favor of respondents-spouses. Respondents appellate court correctly held that such "knowledge of a prior transfer of a registered property by a subsequent purchasers makes him a purchaser in bad faith and his knowledge of such transfer vitiates his title acquired by virtue of the latter instruments of conveyance with creates no right as against the first purchaser."

SALES; DOUBLE SALE OF REAL PROPERTY; OWNERSHIP OF PROPERTY ACQUIRED BY VENDEE WHO FIRST REGISTERS SALE IN GOOD FAITH. The governing principle here is prius tempore, potior jure (first in time, stronger in right). Knowledge gained by the first buyer of the second sale cannot defeat the first buyer's right except only as provided by the Civil Code and that is where the second buyer first registers in good faith the second sale ahead of the first. Such knowledge of the first buyer does not bar her from availing of her rights under the law, among them to register first her purchase as against the second buyer.

IN THIS CASE But in converso knowledge gained by the second buyer of the first sale defeats his rights even if he is first to register the second sale, since such knowledge taints his prior registration with bad faith. This is the price exacted by Article 1544 of the Civil Code of the second buyer being able to displace the first buyer; that before the second buyer can obtain priority over the first, he must show that he acted in good faith throughout (i.e. in ignorance of the first sale and of the first buyer's rights) from the time of acquisition until the title is transferred to him by registration or failing registration, by delivery of possession. The second buyer must show continuing good faith and innocence or lack of knowledge of the first sale until his contract ripens into full ownership through prior registration as provided by law."ARTICLES 1545 TO 1570

MOLES vs IAC (2nd hand item) IMPLIED WARRANTY: there is no implied warranty in the sale of secondhand articles (as to the condition, adaptation, fitness, or suitability for the purpose for which made, or the quality, of an article sold) HOWEVER, in case at bar, there was a certification by the seller that the linotype machine bought is in A1 condition (considered as an express warranty), making him bound by such execution. HIDDEN DEFECTS: hidden defects in the machine is sufficient to warrant a rescission of the contract between the parties 1561: A redhibitory defect must be an imperfection or defect of such nature as to engender a certain degree of importance. PRESCRIPTION: 1571: six months prescriptive period only applies in cases of implied warranties The present case involves one with an express warranty. Consequently, the general rule on rescission of contract, which is four yearsshall apply. Considering that the original case for rescission was filed only one year after the delivery of the subject machine, the same is well within the prescriptive period.ENGINEERING AND MACHINERY CORP vs CA PRESCRIPTION:

it would appear that this suit is barred by prescription because the complaint was filed more than four years after the execution of the contract and the completion of the air-conditioning system; HOWEVER, the original action is not really for enforcement of the warranties against hidden defects, but one for breach of the contract itself - Art. 1715 will apply. Since this provision does not contain a specific prescriptive period, the general law on prescription, which is Article 1144 of the Civil Code, will apply 10 years.

PIECE OF WORK

the contract is one for a piece of work - contractor binds himself to execute a piece of work for the employer, in consideration of a certain price or compensation. The contractor may either employ only his labor or skill, or also furnish the material; NOT A SALE

It is not petitioners line of business to manufacture air-conditioning systems to be sold off-the-shelf. Its business and particular field of expertise is the fabrication and installation of such systems as ordered by customers and in accordance with the particular plans and specifications provided by the customers.

HIDDEN DEFECTS

remedy against violations of the warranty against hidden defects is either to withdraw from the contract (redhibitory action) or to demand aproportionate reduction of the price(accion quanti minoris),with damages in either case.[CATUNGAL vs. RODRIGUEZ (Right of Way Acquisition) failure to comply with the condition imposed merely on the performance of an obligation merely gives the other party the option to either refuse to proceed with the sale or to waive the condition - Art. 1545. From the provisions of the Conditional Deed of Sale subject matter of this case, it was the vendee (Rodriguez) that had the obligation to successfully negotiate and secure the road right of way. However, in the decision of the trial court, which was affirmed by the Court of Appeals, it was found that respondent Rodriguez diligently exerted efforts to secure the road right of way but the spouses Catungal, in bad faith, contributed to the collapse of the negotiations for said road right of way. Rodriguezs option to rescind the contract is not purely potestative but rather also subject to the same mixed condition as his obligation to pay the balance of the purchase price i.e., the negotiation of a road right of way. In the event the condition is fulfilled (or the negotiation is successful), Rodriguez must pay the balance of the purchase price. In the event the condition is not fulfilled (or the negotiation fails), Rodriguez has the choice either (a) to not proceed with the sale and demand return of his downpayment or (b) considering that the condition was imposed for his benefit, to waive the condition and still pay the purchase price despite the lack of road access.J.M. TUASON vs CA WARRANTY AGAINST EVICTION

private respondents were lacking in good faith for knowing beforehand, at the time of the sale, the presence of an obstacle to their taking over the possession of the land, which, in effect, would amount to eviction from said land, and still they bought the land without first removing that obstacle. One who purchases real estate with knowledge of a defect or lack of title in his vendor cannot claim that he has acquired title thereto in good faith, as against the true owner of the land or of an interest therein; andthe same rule must be applied to one who has knowledge of facts which should have put him upon such inquiry and investigation as might be necessary to acquaint him with the defects in the title of his vendor. A purchaser cannot close his eyes to facts which should put a reasonable man upon his guard and then claim that he acted in good faithunder the belief that there was no defect in the title of the vendor Without being shown to be vendees in good faith, herein respondents are not entitled to the warranty against eviction nor are they On titled to recover damages (Article 1555 of the Civil Code).ARTICLES 1600 TO 1618

RAMOS vs CA (1602) The purported deed of sale con pacto de retro are equitable mortgages; the two deeds were executed by reason of the loan and that the purchase price stated was the amount of load itself.

The true intention of the parties being that the transaction shall secure the payment of the debt, it shall be presumed to be an equitable mortgage; existence of one circumstance is enough to create the presumption

Sales with a right to repurchase are not favored. Whenever it is clearly shown that a deed of sale with pacto de retro, regular on its face, is given as security for a loan, it must be regarded as an equitable mortgage.

DE LEON vs SALVADOR (REDEMPTION PRICE) While in ordinary sales for reasons of equity, a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks one conscience as to justify the courts to interfere, such does not follow when the law gives to the owner the right to redeem.

In auction sale, THE LESSER THE VALUE (REDEMPTION PRICE), MORE ADVANTAGEOUS TO THE REDEMPTIONER

When there is a right to redeem, inadequacy of price should not be material, because the judgment debtor may reacquire the property or also sell his right to redeem and thus recover the loss he claims to have suffered by reason of the price obtained at the auction sale.

FLORES V. SO, 162 SCRA 117 It is provided in Article 1509 thereof that if the vendor does not comply with the provisions of Article 1518, (i.e. to return the price, plus expenses) the vendee shall acquire irrevocably the ownership of the thing sold. Under the old Civil Code, the ownership was consolidated in the vendee a retro by operation of law. Accordingly, upon the failure of Valentin Gallano, as the vendor a retro, to redeem the property subject of the pacto de retro sale within the period agreed upon, the vendee a retro, Alfonso Flores, became the absolute owner of the subject property.

ALONZO V. IAC, 150 SCRA 259 We are not abandoning the De Conejero and Buttle doctrines. What we are doing simply is adopting an exception to the general rule, in view of the peculiar circumstances of this case. The co-heirs in this case were undeniably informed of the sales although no notice in writing was given them. And there is no doubt either that the 30-day period began and ended during the 14 years between the sales in question and the filing of the complaint for redemption in 1977, without the co-heirs exercising their right of redemption. These are the justifications for this exception.

LAO V. CA, 275 SCRA 237 In determining the nature of a contract, the Court looks at the intent of the parties and not the nomenclature used to describe it. Pivotal to deciding this issue is the true aim and purpose of the contracting parties as shown by the terminology used in the covenant, as well as "by their conduct, words, actions and deeds prior to, during and immediately after executing the agreement."

EQUITABLE MORTGAGE, WHEN PRESUMED. The law enumerates when a contract may be presumed to be an equitable mortgage: "(1) When theprice of a sale with right to repurchase is unusually inadequate; (2) When the vendor remains in possession as lessee or otherwise; (3) When upon or after the expiration of the right to repurchase another instrument extending the period of redemption or granting a new period is executed; (4) When the purchaser retains for himself a part of the purchase price; (5) When the vendor binds himself to pay the taxes on the thing sold; (6) In any other case where it may be fairly inferred that the real intention of the parties is that the transaction shall secure the payment of a debt or the performance of any other obligation. . ." The foregoing presumption applies also to a "contract purporting to be an absolute sale."

CASE AT BAR. Applying the preceding principles to the factual milieu of this case, we find the agreement between the private respondent and N. Domingo Realty & Housing Corporation, as represented by petitioner,manifestly one of equitable mortgage. First , possession of the property remained with Petitioner Manuel Lao who was the beneficial owner of the property, before, during and after the alleged sale. Second, the option given to Manuel Lao to purchase the property in controversy had been extended twice through documents executed by Mr. Tan Bun Uy, President and Chairman of the Board of Better Homes Realty & Housing Corporation. The wording of the first extension is a refreshing revelation that indeed the parties really intended to be bound by a loan with mortgage, not by a pacto de retro. Third, unquestionably, Manuel Lao, and his brother were in such "dire need of money" that they mortgaged their townhouse units registered under the name of N. Domingo Realty Corporation, the family corporation put up by their parents, to Private Respondent Better Homes Realty & Housing Corporation. In retrospect, it is easy to blame Petitioner Manuel Lao for not demanding a reformation of the contract to reflect the true intent of the parties. But this seeming inaction is sufficiently explained by the Lao brothers' desperate need for money, compelling them to sign the document purporting to be a sale after they were told that the same was just for "formality." Based on the conduct of the petitioner and private respondent and even the terminology of the second option to purchase, we rule that the intent and agreement between them was undoubtedly one of equitable mortgage and not of sale. IN CASE OF AMBIGUITY, A CONTRACT IS DEEMED TO BE ONE WHICH INVOLVES A LESSER TRANSMISSION OF RIGHTS AND INTEREST.

LANUZA V. DE LEON, 20 SCRA 269 Between an unrecorded sale of a prior date and a recorded mortgage of a later date, the former is preferred to the latter for the reason that if the original owner had parted with his ownership of thing sold then he no longer had the ownership and free disposal of that thing so as to be able to mortgage it again. Registration of the mortgage under Act No. 3344 would, in such case, be of no moment since it is understood to be without prejudice to the better right of third parties. Nor would it avail the mortgagee for the execution of the conveyance in a public instrument earlier was equivalent to the delivery of the thing sold to the vendee. (Civil Code, Article 1948)

The stipulation in deed denominated by the parties as a "Deed of Sale With Right to Repurchase" to the effect that if the vendor fails to pay the amount agreed upon within the stipulated period, his right to repurchase the property shall be forfeited and the ownership over the same would automatically pass to the vendee without need of court intervention, is contrary to the nature of a true pacto de retro sale, under which a vendee acquires ownership of the thing sold immediately upon execution of the sale, subject only to the vendor's right of redemption. Indeed, the stipulation which enables the mortgagee to acquire ownership of the mortgaged property without need of foreclosure proceedings establishes a pactum commissorium , and, being contrary to the provisions of Article 2080 of the Civil Code, is a nullity. Its insertion in the contract is an avowal of an intention to mortgage rather than to sell.

Between the unrecorded deed of Reyes and Navarro which we hold to be an equitable mortgage, and the registered mortgage of De Leon, the latter must be preferred. Preference of mortgage credits is determined by the priority of registration of the mortgages, following the maxim "Prior tempore potior jure".

CAPULONG V. CA, 130 SCRA 245 Where any of the circumstances defined in Article 1602 of the Civil Code is present, a contract of sale with right to repurchase is presumed to be an equitable mortgage. In practically all of the so-called contracts of sale with right of repurchase, the real intention of the parties is that the pretended purchase price is money loaned and in order to secure the payment of the loan, a contract purporting to be a sale with pacts de retro is drawn up.

In the case at bar, the records show that over a six month period, the mother of petitioners borrowed money on no less than ten separate occasions from Delfin G. Tolentino. The evidence presented by Mrs. Jovita Ponce Vda. de Capulong alleged that her total borrowing of P13,000.00 were added to what she claims were serious interests amounting to P3,250.00, the kited total of P16,250.00 was made to appear as P21,300.00 purchase price for the lot when actually no money outside of the ten earlier loan transactions was exchanged between the parties. The added fact that Jovita Capulong remained in actual possession of the land and enjoyed the fruits thereof confirms the real intention of the parties to secure payment of the loans with the land as security. The records show that the private respondents waited for the period of redemption to expire before taking possession of the land. Had the petitioner's mother really executed anabsolute sale in favor of respondent Delfin Tolentino the land which is the subject of the transaction should have been delivered to Tolentino and he would assume immediate possession after the execution of the questioned deed of sale.The deed of sale taken together with the companion "right to redeem" contract is only an equitable mortgage.

SOLID HOMES INC V. CA, G.R. NO. 117501, 8 JULY 1997 In a contract of sale with pacto de retro, the vendee has a right to the immediate possession of the property sold, unless otherwise agreed upon. It is basic that in pacto de retro sale, the title and ownership of the property sold are immediately vested in the vendee a retro, subject only to the resolutory condition of repurchase by the vendor a retro within the stipulated period.

Petitioner is right in its observation that the Court of Appeals' inclusion of registration fees, real estate and documentary stamp taxes and other incidental expenses incurred by State Financing in the transfer and registration of its ownership (of the subject properties) via dacion en pago was vague, if not erroneous, considering that such transfer and issuance of the new titles were null and void. Thus, the redemption price shall include only those expenses relating to the registration of the dacion en pago, but not the registration and other expenses incurred in the issuance of new certificates of title in the name of State Financing.

PRIMARY STRUCTURES CORP V. VALENCIA, G.R. NO. 150060, 19 AUG 2003Whenever a piece of rural land not exceeding one hectare is alienated, the law grants to the adjoining owners a right of redemption except when the grantee or buyer does not own any other rural land. In order that the right may arise, the land sought to be redeemed and the adjacent property belonging to the person exercising the right of redemption must both be rural lands. If one or both are urban lands, the right cannot be invoked. Here, the one or both are urban lands, the right cannot be invoked. Here, the trial court found the lots involved to be rural lands and respondents did not dispute it before the Court of Appeals.

Article 1621 of the Civil Code expresses that the right of redemption it grants to an adjoining owner of the property conveyed may be defeated if it can be shown that the buyer or grantee does not own any other rural land. The appellate court, sustaining the trial court, has said that there has been no evidence proffered to show that respondents are not themselves owners of rural lands for the exclusionary clause of the law to apply.

Article 1623 of the Civil Code provides that the right of legal pre-emption or redemption shall not be exercised except within thirty days from notice in writing by the prospective vendor, or by the vendor, as the case may be. In stressing the mandatory character of the requirement, the law states that the deed of sale shall not be recorded in the Registry of Property unless the same is accompanied by an affidavit of the vendor that he has given notice thereof to all possible redemptioners. The Court of Appeals has equated the statement in the deed of sale to the effect that the vendors have complied with the provisions of Article 1623 of the Civil Code, as being the written affirmation under oath, as well as the evidence, that the required written notice to petitioner under Article 1623 has been met. Respondents, like the appellate court, overlook the fact that petitioner is not a party to the deed of sale between respondents and Mendoza and has had no hand in the preparation and execution of the deed of sale. It could not thus be considered a binding equivalent of the obligatory written notice prescribed by the Code.

LEASE CASESGUZMAN, BOCALING & CO. vs BONNEVIE

G.R. No. 86150. March 2, 1992*Right of First PrioritySALE; PURCHASER IN GOOD FAITH AND FOR VALUE; CONSTRUED IN CASE AT BAR. A purchaser in good faith and for value is one who buys the property of another without notice that some other person has a right to or interest in such property and pays a full and fair price for the same at the time of such purchase or before he has notice of the claim or interest of some other person in the property. Good faith connotes an honest intention to abstain from taking unconscientious advantage of another. IN THIS CASE Petitioner cannot tenably claim to be a buyer in good faith as it had notice of the lease of the property by the Bonnevies and such knowledge should have cautioned it to look deeper into the agreement to determine if it involved stipulations that would prejudice its own interests. The petitioner insists that it was not aware of the right of first priority granted by the Contract of Lease. Assuming this to be true, we nevertheless agree with the observation of the respondent court that: If Guzman-Bocaling failed to inquire about the terms of the Lease Contract, which includes Par. 20 on priority right given to the Bonnevies, it had only itself to blame. Having known that the property it was buying was under lease, it behooved has a prudent person to have required Reynoso or the broker to show to it the Contract of Lease in which Par. 20 is contained.Quick Case Recap:: 2 buildings on parcel of land of land owned intestate by Reynoso, leased to Bonnevie brothers with Par 20 of agreement specifying right of first priority given to lessee Bonnevie should lessor Reynoso decide to sell all things and consideration being equal. Reynoso offered to sell to them through a letter the subject property for 600k in cash less mortgage loan of 100k, they failed to exercise right of first priority (they later rebutted they didnt receive the notification letters). Reynoso offered same property to petitioner GBC for 137.5k in cash with balance 262.5k to be paid when premises are vacated. Leased premises were formally sold to petitioner. (Hence, there was NO IDENTITY OF THE TERMS AND CONDITIONS OFFERED to the Bonnevies and other prospective buyers.)Even if the Bonnevies could not buy it at the price quoted, Reynoso could not sell it to another for a lower price and under more favorable terms and conditions. Only if the Bonnevies failed to exercise their right of first priority could Reynoso lawfully sell the subject property to others, and at that only under the same terms and conditions offered to the Bonnevies.YEK SENG CO. VS CAG.R. No. 87415. January 23, 1992

RULE WHEN RENTAL WAS PAID MONTHLY AND THE TERM HAD NOT BEEN EXPRESSLY AGREED UPON; CASE AT BAR. We hold that as the rental in the case at bar was paid monthly and the term had not been expressly agreed upon, the lease was understood under Article 1687 to be terminable from month to month. At the time the petitioner was asked to vacate the leased premises, the lease contract had already expired and therefore, could no longer be extended.

GENERAL RULE: POWER OF THE COURT TO EXTEND THEREOF; MERELY A MINISTERIAL DUTY. If the contract of lease had not yet expired, its extension would still be subject to the sound discretion of the court and was by no means obligatory upon it as a merely ministerial duty.

LAW; SPECIAL CONTRACTS; LEASE; EXTENSION OF THE LEASE CONTRACT; MATTERS TO BE CONSIDERED IN ALLOWING THEREOF; DIVINO v. MARCOS (4 SCRA 186) CITED. In extending the lease contract it was considered important in the case of Divino v. Marcos (4 SCRA 186) that: 1) the plaintiff had been occupying the leased premises for more than twenty years; 2) he was assured by the defendants that he could remain in the house as long as he continued paying the rentals; and 3) he made improvements on the house costing P20,000.00 with the consent of the defendants.

IN THIS CASE The petitioner in the case at bar has not pointed to similar circumstances other than the claim that it has been occupying the subject premises for more than twenty years.

UNITED REALTY CORP vs CA lease agreement is for a definite period, per the stipulation that the agreement would be terminated when either party gives a notice in five (5) days in writing. Since the lease agreement in question is for a definite period it follows that petitioner has a right to judicially eject private respondent from the premises as an exception to the general rule provided for in Section 4 of P.D. No. 20 which provides as follows:

Except when the lease is for a definite period, the provisions of paragraph (1) of Article 1673 of the Civil Code of the Philippines insofar as they refer to dwelling unit or land on which another's dwelling is located shall be suspended until otherwise provided; but other provisions of the Civil Code and the Rules of Court of the Philippines on lease contracts insofar as they are not in conflict with the provisions of this Act, shall apply.

Moreover, under Section of 5(f) of B.P. Blg. 25 one of the grounds for ejectment is the expiration of the period of a written lease contract. In this case, because of the failure of the private respondent to pay the increased rental demanded by petitioner, petitioner elected to terminate the contract and asked the private respondent to vacate the premises. A lease contract may be terminated at the end of any month, which shall be deemed terminated upon the refusal to pay the increased monthly rental demanded by the petitioner, provided the same is not exorbitant.LEGAR MANAGEMENT & REALTY CORPORATION VS CALease; Actions; Ejectment; Rent Control Law; The lessee of a residential property covered by the Rent Control Law can be ejected on the basis alone of the expiration of the verbal lease contract.The issue is whether the lessee of a residential property covered by the Rent Control Law can be ejected on the basis alone of the expiration of the verbal lease contract under which rentals are paid monthly. We resolved this issue in the affirmative in the case of Acab vs. Court of Appeals, G.R. No. 112285, February 21, 1995, 241 SCRA 546. We held: Section 6 of Batas Pambansa Blg. 877, which is exactly the same as Section 6 of Batas Pambansa Blg. 25, provides that: x x x. In a long line of cases, x x x beginning with Rivera vs. Florendo, 143 SCRA 278 (1986), this Court has held that said provision does not suspend the effects of Article 1687 of the New Civil Code x x x. Thus, we have held that lease agreements with no specified period, but in which rentals are paid monthly, are considered to be on a month-to-month basis. x x x They are for a definite period and expire after the last day of any given thirty-day period, upon proper demand and notice by the lessor to vacate. x x x In the case at bench, it was found by all three lower courts that the lease over the subject property was on a month-to-month basis, and that there was proper notice of non-renewal of contract andDOCTRINES IN SALES & LEASE

I. EXTINGUISHMENT OF SALES

1) Ramos vs. CA

The true intention of the parties being that the transaction shall secure the payment of the debt, it shall be presumed to be an equitable mortgage. The existence of one circumstance under Art. 1602 is enough to create the presumption. Parol evidence shall be considered in determining the true intention of the parties.

2) De leon vs. Salvador

While in ordinary sales for reasons of equity a transaction may be invalidated on the ground of inadequacy of price, or when such inadequacy shocks ones conscience as to justify the courts to interfere, such does not follow when the law gives to the owner the right to redeem, as when a sale is made at public auction, upon the theory that the lesser the price, the easier it is for the owner to effect the redemption. And so it was aptly said that when there is the right to redeem, inadequacy of price should not be material, because the judgment debtor may reacquire the property or also sell his right to redeem and thus recover the loss he claims to have suffered by reason of the price obtained at the auction sale.

3) Flores vs. So

Under the Old Civil Code, ownership is consolidated by operation of law. A right of ownership vested way back from the time the Old Civil Code was still in effect cannot be defeated by the application of Articles 1606 and 1607 of the New Civil Code.

In a pacto de retro sale, ownership over a thing sold is transferred to the vendee upon execution of the contract subject only to the resolutory condition that the vendee exercise his right of repurchase within the period agree upon.

4) Alonzo vs. IAC

Where co-heirs filed action for redemption of co-heirs sold share only after 13 years had elapsed from the sale, they are deemed to have been actually informed thereof sometime during those years although no written notice of sale was given to them. From the day the first complaint for redemption was filed, it shall be deemed that the co-heirs were actually informed of the sale and that thereafter the 30-day period started running.

5) Lao vs. CA

A person who is in dire need of money may be compelled to sign a document purporting to be a sale but in fact a mortgage. Such presumption arises from a statement in a deed of sale with the right to repurchase that the vendor borrowed from the vendee the money used in buying the property from the original owner. (de Leon book)

In determining the nature of the contract whether it is a pacto de retro sale or an equitable mortgage, the Court looks at the intent of the parties and not at the nomenclature used to describe it. Hence, parol evidence becomes admissible to prove the intent and agreement of the parties.

6) Lanuza vs. de leon

The stipulation in pacto de retro sale that the ownership over the property sold would automatically pass to the vendee in case no redemption was effected within the stipulated period, is contrary to the nature of a true pacto de retro sale under which the vendee acquires ownership of the thing sold immediately upon the execution of the sale, subject only the vendors right of redemption. The said stipulation is pactum commissorium which enables the mortgagee to acquire ownership of the mortgaged property without foreclosure. It is void. (de Leon book)

7) Capulong vs. CA

The deed of sale and deed of option to purchase the property are in reality an equitable mortgage, as they were signed on the same day. A subsequent sale of the property to a vendee-a-retro and its registration on the same day indicate said sale is not a pacto de retro sale.

The existence of equitable mortgage can be shown by the fact that a series of loan were obtained by a vendor from a vendee.

8) Solid Homes Inc vs. CA

In a contract of sale with pacto de retro, the vendee has a right to the immediate possession of the property sold, unless otherwise agreed upon. It is basic that in a pacto de retro sale, the title and ownership of the property sold are immediately vested in the vendee a retro,, subject only to the resolutory condition of repurchase by the vendor a retro within the stipulated period.

The Court ruled that Article 1616 of the Civil Code is not restrictive or exclusive, barring additional amounts that the parties may agree upon. Said provision should be construed together with Article 1601 of the same code requiring the vendor to comply with the provisions of Article 1616 and other stipulations agreed upon by the parties.

9) Lee Chuy Realty Corp vs. CA

Bona fide tender of the redemption price, within the prescribed period is only essential to preserve the right of redemption for future enforcement beyond such period of redemption and within the period prescribed for the action by the statute of limitations. Where the right to redeem is exercised through judicial action within the reglementary period, the offer to redeem, accompanied by a bona fide tender of the redemption price, while proper, may be unessential.

II. LEASE

10) Guzman Bocaling vs. Bonnevie

A lease with a proviso granting the lessee the right of first priority all things and conditions being equal meant that there should be identity of the terms and conditions to be offered to the lessee and all other prospective buyers, with the lessee to enjoy the right of first priority. A deed of sale executed in favor of a third party who cannot be deemed a purchaser in good faith, and which is in violation of a right of first refusal granted to the lessee is not voidable under the Statute of Frauds but rescissible under Articles 1380 to 1381 (3) of the New Civil Code.

Contract of Sale was not voidable but rescissible. Under Article 1380 to 1381 (3) of the Civil Code, a contract otherwise valid may nonetheless be subsequently rescinded by reason of injury to third persons, like creditors. The status of creditors could be validly accorded the Bonnevies for they had substantial interest that were prejudiced by the sale of the property to the petitioner without recognizing their right of first priority under the Contract of Lease. According to Tolentino, rescission is a remedy granted by law to the contracting parties and even to third persons, to secure reparations for damages caused to them by a contract, even if this should be valid, by means of the restoration of things to their condition at the moment prior to the celebration of said contract.

11) Yek Seng Co vs. CA

The circumstance that the lessee has paid its rentals religiously during the past twenty (20) years is also not sufficient to justify the extension that it demands. Neither are the substantial improvements it allegedly made on the leased premises nor the difficulty of finding another place of business, on which it has not submitted any evidence at all.

If the rental was paid monthly and term had not been expressly agreed upon, the lease was understood under Art.1687 to be terminable from month to month.

12) Sps. Clutario vs. CA

Acceptance in rentals in arrears does not constitute waiver of default in payment of rentals.

Non-payment of rentals is a ground for judicial ejectment under CC and BP22.

13) Yap vs. Cruz

In the absence of notice or demand to vacate, the lease of a lessee continues to be in force and cannot be deemed to have expired as of the end of the month automatically.

14) United Realty Corp. vs. CA

The lease agreement in question being for a definite period, the lessors right to judicially eject the lessee is an exception to the general provided for in Sec. 4 of PD No. 20 (Except when the lease is for a definite period, the provisions of par.1 of Art.1673 of CC insofar as they refer to dwelling unit or land on which anothers dwelling is located shall be suspended until otherwise provided; but other provisions of the CC and Rules of Court on lease contracts insofar as they are not in conflict with the provisions of this Act, shall apply)

One of the grounds for ejectment under Sec.5 of BP25 is the expiration of the period of a written lease contract.

The lease agreement does not fall within the protective mantle of the provisions of PD20 and BP25 which covers only dwelling units.

Lease on a month to month basis expires after the last day of the 30th day period.

15) Legar Mgt & Realty Corp. vs. CA

The lessee of a residential property covered by the Rent Control Law can be ejected on the basis alone of the expiration of the verbal lease contract.

1 | SALES 2ND HALF SALES DOCTRINES

BILLEDO CAGOCO PEREZ UY